Last weekend’s snap shift of the 2019 general elections by INEC Chairman, Mahmood Yakubu, sent the Nigerian stock market on a downward spiral.
The All Share Index shed 1.61% on Monday, largely due to drops in large-cap stocks such as Dangote Cement and Zenith Bank. The equities market, however, rebounded yesterday, gaining 0.67%.
As at the time of writing this report, the All-Share Index was up 0.17%.
Last Saturday, the commission shifted the election due to what it termed, logistic challenges. Presidential and National Assembly elections are now billed to take place on Saturday, February 23, 2019. Gubernatorial and State Assembly elections are now scheduled for Saturday, March 9, 2019.
Precedents from 2015
If history repeats itself, the drop could be the precursor of a largely bearish week. On the 7th of February 2015, then INEC Chairman, Attahiru Jega, shifted the 2015 elections. The move was following a request from the Presidency due to security issues in the North East.
On the 9th of February 2015, the first trading day after the shift was announced, the NSE All-Share Index fell by 2.08%. On the 10th of February 2015, the Index continued its decline, shedding 0.80%. On the 11th of February 2015, the market fell sharply closing down 1.39%. On the 12th of February 2015, which was the last trading day for that week, the All Share Index tanked heavily, falling by 2.73%.
The Nigerian Stock Exchange thus closed in the red throughout that week, declining by a total of 8.25%.
Reasons for the decline
In the prior week, the market rallied sharply, with foreign investors taking positions in some stocks in anticipation of earnings season.
The abrupt shift of the elections heightened the country risk and would have led to some investors exiting and switching to cash. The general consensus had been that the elections would hold as scheduled and have a peaceful outcome. Foreign investors account for about 50% of transactions on the Nigerian Stock Exchange.
Will it close up or down?
While precedence shows the market could close in the red, the gradual release of results has led to positive sentiments in the market. From all indications, the Nigerian Stock Exchange may close positively this week.